Required Report - public distribution Date: 6/1/2009 GAIN Report Number: ID9017 Indonesia BIOFUELS ANNUAL Annual Report 2009 Approved By: Dennis Voboril Prepared By: Aji K. Bromokusumo Report Highlights: As CPO prices began to recover during the first half of 2009, one producer confirmed that Pertamina the state-owned oil company - has stopped ordering biofuel from their plant that had previously reached 5,000 MT/month. As a result, biodiesel in commercial petrol stations has dropped from its earlier peak of 5% mixture to 1% mixture. Post: Jakarta Commodities: select select Executive Summary:
Production In Calendar Year (CY) 2008, the drop in global oil prices has led the Government of Indonesia (GOI) to lower the retail prices of gasoline and diesel, respectively. In Indonesia, consumer-based fuel prices are controlled by the government. Concomitantly, as the international market price for CPO declined rapidly in the latter half of 2008, local biodiesel producers began to increase their domestic production. In addition to the economic factors, this move was also affected by the GOI policy decree from Ministry of Energy and Mineral Resources. This decree, known officially as Regulation No. 32/2008, was signed on 13 October 2008 and effective in January 2009, mandates a minimum of 1 percent biofuel mixture in fuel sold in petrol stations in two major cities in Indonesia - Jakarta and Surabaya. As CPO and other commodity prices fell during the second half of 2008, it became economical during this period to produce biofuel thus the local biodiesel mixture reached 5 percent while ethanol production reached 1 percent. As CPO prices began to recover during the first half of 2009, one producer confirmed that Pertamina the state-owned oil company - has stopped ordering biofuel from their plant that had previously reached 5,000 MT/month. As a result, biodiesel in commercial petrol stations has dropped from its earlier peak of 5% mixture to 1% mixture. Currently, there is only one producer which still actively produces biofuel, but the production is well below plant capacity. The installed capacity is approximately 1.5 MMT/year, but reportedly is operating at approximately 7,000 MT/month. Consumption The use of biofuel in power plants as of December 2008 has reached 0.1 percent. Mandated levels within the Ministerial Decree are 0.25 percent in 2009; 1 percent by January 2010; 10 percent by January 2015; 15 percent by January 2020; and 20 percent by January 2025. Fuel Consumption by Sector in 2008
Year Sector Usage (KL) 2008 Industry 5,203,479.00 2008 Electricity 3,309,124.00 2008 Households 5,043,051.00 2008 20,788,075.00 Total 34,343,729.00 Fuel Consumption by Sector in 2007 Year Sector Usage (KL) 2007 Industry 12,860,843.11 2007 Electricity 1,735,970.00 2007 Households 9,055,221.30 2007 29,576,200.70 Total 53,228,235.10 Fuel Mix 2008
Ministry of Energy and Mineral Resources Source: Year Products Sales (KL) 2008 Burner Fuel 2,829,592.00 2008 Diesel Oil 117,646.00 2008 Diesel 14,815,245.00 2008 Kerosene 5,065,977.00 2008 Octane 88 11,283,564.00 2008 Octane 92 121,735.00 2008 Octane 95 109,970.00 Total 34,343,729.00 Fuel Mix 2007
Year Products Sales (KL) 2007 Airplane Fuel 2,143,000.96 2007 Burner Fuel 3,933,074.11 2007 Diesel Oil 675,007.72 2007 Diesel 19,857,944.55 2007 Kerosene 9,099,892.63 2007 Octane 88 16,616,342.82 2007 Octane 92 427,671.20 2007 Octane 95 473,247.85 Total 53,228,235.10 Biodiesel Indonesia Biofuels Association (APROBI) reported that the biofuels industry has suffered a $2.0 billion financial loss from January May of this year. With CPO prices at $700 or higher, one biodiesel producer has stated that the loss could reach Rp 2,000/liter (Note: US$1 = Rp 10,150 as of June 1, 2009). The only biodiesel producer that still operates at 7,000 MT/month is an integrated palm oil producer. Thus, from plantation to refinery, the feedstock for biodiesel is always available. FAME (Fatty Acid Methyl Ester = biodiesel) can be produced from fresh CPO or from the derivatives of CPO refinery process, such as RBD Palm Stearin.
RBD (Refined, Bleached and Deodorized) palm stearin is obtained from fractionating refined palm oil to separate olein from stearin. It is a white solid at room temperature, melting to a clear yellow liquid upon heating. RBD palm stearin is used in margarine and shortening industries. It is also used in soap, candles and oleochemical industries. RBD palm stearin can be an alternative raw material for biodiesel which is cheaper than fresh CPO and is considered a derivative. The integrated palm oil and biodiesel producer can therefore switch to RBD Palm Stearin when it is economical to do so. Under normal market conditions, the price of RBD palm stearin is usually about 10 20 percent less than the CPO price. Policy Minimum Mixture of Biodiesel (B100) Sector Oct 08 - Dec 08 Jan 2009 Jan 2010 Jan 2015 Jan 2020 Jan 2025 Households not defined (Public Service Obligation) 1% 1% 2.5% 5% 10% 20% (Non PSO) 1% 3% 7% 10% 20% Commercial & industries 2.5% 2.5% 5% 10% 15% 20% Power plants 0.10% 0.25% 1% 10% 15% 20% Regulation No. 32/2008 of Ministry of Energy and Mineral Resources Minimum Mixture of Ethanol (E100) Sector Oct 08 - Dec 08 Jan 2009 Jan 2010 Jan 2015 Jan 2020 Jan 2025 Households not defined (Public Service Obligation) 3% 1% 3% 5% 10% 15% (Non PSO) 5% 5% 7% 10% 12% 15% Commercial & industries 5% 7% 10% 12% 15% Power plants not defined Regulation No. 32/2008 of Ministry of Energy and Mineral Resources Quantity of Feedstock Quantity of Feedstock Use In Biofuel Production 2005 2006 2007 2008 2009 Biodiesel (in MT) Vegetable Oil Soybean Oil 0 0 0 0 0 Rapeseed Oil 0 0 0 0 0 Palm Oil 15,560 16,600 18,300 19,500 20,750 Coconut Oil 0 0 0 0 0 Animal Fats 0 0 0 0 0 Recycled vegetable oil 0 0 0 0 0 Other 0 0 0 0 0 Ethanol
Corn 0 0 0 0 0 Wheat 0 0 0 0 0 Sugarcane 0 0 0 0 0 Sugar beet 0 0 0 0 0 Rye 0 0 0 0 0 Molasses 0 27,000 23,436 25,000 27,000 Wood 0 0 0 0 0 Cassava/tubers 0 0 0 0 0 Biofuels Production Biofuel Production/Consumption/Trade (000 MT) 2005 2006 2007 2008 2009 Biodiesel Beginning stocks 0 0 0 0 0 Production 8 70 100 90 80 Imports 0 0 0 0 0 Total supply 8 70 100 90 80 Exports 6 46 80 80 70 Consumption 2 24 20 10 10 Ending stocks 0 0 0 0 0 Ethanol Beginning stocks 0 0 0 0 0 Production 0 6 10 8 8 Imports 0 0 0 0 0 Total supply 0 0 10 8 8 Exports 0 0 0 0 0 Consumption 0 6 10 8 8 Ending stocks 0 0 0 0 0